YouTube is set to announce within a few weeks a series of channels that will require payment.
The content on the new pay channels will be in addition to the millions of videos viewers watch for free on YouTube. It’s not clear whether the paid videos will come with advertising.
Google (Nasdaq: GOOG) owns YouTube.
Each channel will cost about $1.99 a month, with some variety in price, said one of the people, who sought anonymity because the plans aren’t public. The platform will help programming partners generate revenue beyond advertising and one-time rentals of movies and TV shows, YouTube said yesterday in an e-mailed statement.
“We’re looking into creating a subscription platform that could bring even more great content to YouTube,” the company wrote, without discussing specifics.
With paid YouTube channels, Google would join Netflix Inc. (NFLX), Hulu LLC and Amazon.com Inc. (AMZN) in offering an online alternative to traditional pay TV. Fees could provide YouTube and its suppliers with a supplement to advertising revenue to help pay for more expensive productions, and broaden options for viewers outside of cable or satellite services.
“Google feels comfortable with its market position and the user for this to be something that they would want to pursue,” said Scott Kessler, an analyst with S&P Capital IQ who rates the stock a buy and doesn’t own it. “Google wants to present a more professional outlet for these folks.”
Google, based in Mountain View, California, added 1.9 percent to $861.55 yesterday in New York. The shares have advanced 22 percent this year.
YouTube will generate an estimated $3.6 billion in revenue this year and accounts for as much as $21.3 billion of its parent’s market value, according to a report this month from Barclays analysts.
